Consider the utility function u x y ln x ln y Initially the prices are p x unit and p y unit

Consider the utility function u x y ln x ln y Initially the prices are p

x y ln x ln y Initially the prices are p x unit and p y unit The consumer has an income of

Consider the utility function u x y ln x ln y Initially the prices

are p x unit and p y unit The consumer has an income of

Consider the utility function u x y ln x ln y

Consider the utility function u

Category: | |

Words: | |

Amount: | $25 |

Writer: | 0 |

Paper instructions

Consider the utility function u(x,y) = 2lnx + lny. Initially, the prices are px = $2/unit and py = $1/unit. The consumer has an income of $24. Illustrate your answers with graphs.
(a) Derive the consumer's optimal consumption bundle.
(b) Now suppose the price of good x increases to = $3/unit. What is the new optimal consumption bundle?
(c) Calculate the substitution effect and the income effect.Illustrate it on a graph.
(d) Calculate the compensating variation and equivalent variation of the price change.

# Answer

Get Essay Answer

1,200,000+ Questions

Satisfaction guaranteed

Consider the utility function u ( x,y ) = 2ln x + ln y . Initially, the prices are p x = $2/unit and p y = $1/unit. The consumer has an income of...

Q: Does a stock market crash affect the economy ( e.g. consumer confidence and spending, investments)

Q: Equilibrium marginal utility